SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1996 SEC File No 1-9690
INTERNATIONAL FIBERCOM, INC.
Incorporated in the State of Arizona IRS No. 86-0271282
3615 S. 28th Street
Phoenix, AZ 85040
(602) 941-1900
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such report, and (2) has been subject to such filing
requirements for the past 90 days.
Yes (X) No ( )
Common Stock without par value (6,238,329) shares outstanding at September 30,
1996
1
<PAGE>
PART 1 - Financial Information
Item 1. Financial Statements
The financial statements are included herewith commencing on page F-1.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
General
- -------
During the quarter ended September 30, 1996, the Company continued to generate
new contracting business, much of which was in its utility division, and to
renegotiate contracts with one of its major customers, Cox Communications, Inc.
The Company experienced a significant decrease in its business with US West
Communications during the quarter. In order to attempt to replace a portion of
this business the Company accelerated the development of a division which
provides installation services for telecommunications, cable television, and wet
and dry utilities to housing subdivisions in the Phoenix metropolitan area. The
company's margins for the quarter were adversely affected by the initial costs
incurred to establish this division, including the costs of training, bidding
potential jobs and purchase of equipment. The Company formed the division with
the objective of its becoming a major future source of revenues. Also during the
quarter, the Company began negotiating to become a subcontractor for Bechtel
Corporation and Lucent Technologies, which are the project managers on the
planned development of over 800 cell sites by Sprint in Arizona.
Results of Operations.
- ----------------------
The following discussion relates to the actual operations of the Company in 1996
and for the same period of 1995.
Revenues.
- ---------
Revenues decreased by 22% for the three months ended September 30, 1996 to
$2,792,804 compared to $3,581,268 for the three months ended September 30, 1995.
The decrease is attributable to limited activity in 1996 for telecommunication
clients, AT&T and US West as compared to the respective quarter of 1995.
Although revenues decreased the percentage of revenues attributable to the
installation of fiber-optic for CATV systems increased from 33% in the 1995
quarter to 46% in the current quarter of 1996. Work performed for
telecommunications clients decreased as a percentage of revenue from 27% in the
1995 quarter to 8% in the current quarter of 1996. During the 1996 quarter, 36%
of revenues were attributable to sewer and water installation and subdivision
development, and 10% to electric installation primarily for Salt River Project.
Gross Profit.
- -------------
The Company's gross profit for the 1996 quarter was $116,684, or 4% of revenues,
compared to $643,061 or 18% of revenues, for the comparable period of 1995. The
Company's gross profit decreased primarily due to the investment and
diversification into subdivision development services.
2
<PAGE>
General and Administrative Costs.
- ---------------------------------
The Company's general and administrative expenses were $509,010, or 18% of
revenues, for the 1996 quarter compared to $669,046, or 19% for the 1995
quarter. The decrease in expenses is due primarily to reduction in management
personnel.
Other Income Expense.
- ---------------------
The other income and expense in the 1996 quarter resulted in $78,926 net expense
as compared to net expense of $63,146 in the comparable quarter of 1995. This
difference is due primarily to the increase in interest expense incurred as the
result of equipment purchases financed in late 1995 and in 1996.
Income Tax Expense.
- -------------------
The Company accrued no federal or state income taxes for the 1996 quarter
because of the net operating loss carry forwards attributable 1995 results.
Net Income.
- -----------
The Company incurred a net loss of $475,251 for the 1996 quarter as compared to
a net lost of $89,129 for the third quarter of 1995. This decrease is due
primarily to lower revenues and margins resulting from start up costs associated
with the subdivision development division.
Backlog.
- --------
The Company had a backlog of approximately $2.0 million, on a work in process
basis, as of September 30, 1996. All such work orders are expected to be
completed by January 1997.
Capital Resources and Liquidity.
- --------------------------------
At September 30, 1996, the Company had $63,373 in cash and an approximate
$600,000 line of credit. Such line of credit bears interest at the prime rate of
Wells Fargo Bank plus 1.5%. The Company believes that working capital from
operations of Kleven's business in 1996, will satisfy business growth for the
next twelve months.
3
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
September 30, December 31,
1996 1995
<S> <C> <C>
Current Assets:
Cash and cash equivalents $63,373 $8,749
Accounts receivable
- trade, net of allowance 2,401,039 2,437,648
- other 27,769 45,700
Subscriptions receivable 0 2,373,500
Inventory 0 0
Income tax refund receivable 0 26,000
Prepaid expenses 109,873 47,610
Loans receivable - related parties 262,842 371,781
Accrued interest receivable 0 0
Costs and estimated earnings in excess of billings 670,722 451,503
------------- -------------
Total Current Assets 3,535,618 5,762,491
Property and Equipment, net 2,788,520 3,195,276
Other Assets:
Accounts receivable - long term 95,565 155,565
Loans receivable related party 293,792 293,792
Goodwill, net 2,707,021 2,795,615
Mortgage closing costs 6,111 6,343
Investment in limited partnership 28,781 24,541
Refundable deposits 10,554 13,450
------------- -------------
3,141,823 3,289,306
------------- -------------
Total Assets $9,465,962 $12,247,073
============= =============
</TABLE>
F - 1
<PAGE>
INTERNATIONAL FIBERCOM, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (CONTINUED)
AS OF SEPTEMBER 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS EQUITY
September 30, December 31,
1996 1995
<S> <C> <C>
Current Liabilities:
Bank Overdraft $0 $57,751
Notes payable current portion 618,000 2,096,4664
Notes payable term loans 584,627 0
Notes payable related party 10,000 60,000
Obligations under capital lease 102,420 112,491
Accounts payable
- trade 1,567,773 1,785,999
- related parties (5,995) 52,121
Accrued expenses 148,023 946,730
Accrued interest 0 0
Deferred income tax payable 0 0
Billings in excess of cost estimated earnings 171,717 286,178
-------------- -------------
Total Current Liabilities 3,196,565 5,397,736
-------------- -------------
Long-Term Liabilities:
Notes payable-long term 278,410 700,706
Obligations under capital lease 417,588 494,100
Deferred income taxes payable 0 0
-------------- -------------
Total Long-Term Liabilities 695,988 1,194,806
-------------- -------------
Total Liabilities 3,892,563 6,592,542
-------------- -------------
Stockholders Equity:
Series A convertible preferred
stock, 100,000,000 shares authorized 1,972 and
2,750 issued respectively 1,694,856 2,296,382
Common Stock, no par, 100,000,000
shares authorized 8,383,873 7,274,929
Common stock warrants 99,082 99,082
Additional paid in capital 352,073 352,073
Retained earnings (4,288,468) (3,699,918)
6,241,416 6,322,548
-------------- -------------
Less: treasury stock 178,690 shares, at cost (668,017) (668,017)
-------------- -------------
Total Stockholders' Equity 5,573,399 5,654,531
============== =============
Total Liabilities and Stockholders' Equity $9,465,962 $12,247,073
============== =============
</TABLE>
F - 2
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Contract Revenues $2,792,804 $3,581,268 $9,158,640 $10,133,426
Cost of Contract Revenues 2,676,120 2,938,207 7,909,219 8,380,960
---------------- ---------------- ---------------- ---------------
Gross Profit 116,684 643,061 1,249,421 1,752,466
General and Administrative Expenses 509,010 669,046 1,638,387 1,894,716
---------------- ---------------- ---------------- ---------------
Profit from operations (392,326) (25,985) (388,966) (142,250)
Other Income (Expense):
Interest income 428 11 6,088 17,047
Interest expense (87,432) (72,942) (279,331) (158,978)
Other income 78 6,388 36,578 69,359
Gain on disposal of assets 8,000 3,399 37,082 145.233
================ ================ ================= ===============
(78,926) (63,144) (199,583) 72,661
================ ================ ================= ===============
Net income before income taxes ($471,251) ($89,129) ($588,549) (69,589)
================ ================ ================= ===============
Discontinued Operations:
Income (loss) from operations of
International Environmental Corp.
(net of income taxes) $0 $0 $0 $0
Provision for tax benefit (expense) 0 0 0 0
---------------- ---------------- ---------------- ---------------
Net income ($471,251) ($89,129) ($588,549) ($69,589)
================ ================ ================ ===============
Earnings (loss) per Share:
Income from continuing operations ($0.08) ($0.02) ($0.10) ($0.02)
----------------- ---------------- ----------------- ---------------
(Loss) from discontinued operations 0.00 0.00 0.00 0.00
---------------- ---------------- ---------------- ---------------
Net income (loss) ($0.08) ($0.02) ($0.10) ($0.02)
---------------- ---------------- ---------------- ---------------
Weighted average Shares Outstanding 6,059,639 4,238,382 6,059,639 4,238,382
================ ================ ================ ===============
</TABLE>
F - 3
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ($588,549) ($69,589)
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities:
Depreciation and Amortization 527,325 318,868
(Increase) decrease in contracts receivable 114,540 379,106
(Increase) decrease in subscriptions receivable 2,373,500 0
(Increase) decrease in inventory 0 132,000
(Increase) decrease in costs and estimated earnings in
excess of billings on uncompleted contracts (219,219) (1,052,119)
(Increase) decrease in prepaid expenses (62,263) (58,886)
(Increase) decrease in income tax refund 26,000 205,238
(Decrease) increase in accounts payable (276,342) 632,728
(Decrease) increase in accrued expenses (798,707) (123,622)
(Decrease) increase in billings in excess of cost and
estimated earnings on uncompleted contracts (114,461) 146,103
(Decrease) increase in deferred taxes 0 0
-------------- --------------
Net cash provided (used) by operating activities 981,824 509,827
-------------- --------------
Cash flows from investing activities:
(Purchase) sale of property and equipment (120,569) (1,153,259)
(Increase) decrease in deposits and 2,896 10,984
(Increase) decrease in goodwill and other assets 84,586 0
-------------- --------------
Net cash provided (uses) by investing activities (33,087) ($1,142,275)
Cash flows from financing activities:
(Repayment) increase of loans and other
liabilities payable (1,452,718) 826,553
Proceeds from public offering, net 507,417 29,531
(Repayment) proceeds from stockholder loan 108,939 (102,700)
-------------- --------------
Net cash provided (used) by financing activities (836,362) (753,384)
-------------- --------------
Net (decrease) increase in cash 112,375 120,936
Cash, beginning of period (49,002) (93,512)
Cash, end of period 63,373 $27,424
============== ==============
</TABLE>
F-4
<PAGE>
INTERNATIONAL FIBERCOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
FOR THE PERIOD ENDED SEPTEMBER 30, 1996 AND
THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Series A
Convertible Common Stock Additional
Preferred --------------------------- Stock Accumulated Paid - In Treasury
Stock Shares Issued Amount Warrants Deficit Capital Stock
-------------- ------------- ------------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Stockholders' Equity,
December 31, 1994 - 4,417,072 7,274,929 99,082 (1,511,535) 352,073 (668,017)
Issuance of 2,750 shares
of Series A Convertible
Preferred, net of costs 2,296,382 - - - - - -
Net Loss, 1995 - - - - (2,188,383) - -
-------------- ------------- ------------- ------------- ------------- ----------- -----------
Stockholders' Equity,
December 31, 1995 $2,296,382 4,417,072 $7,274,929 $99,082 ($3,699,918) $352,073 ($668,017)
Conversion of 1,328 shares
of Series A Convertible
Preferred Stock to
1,821,257 shares of
Common Stock ($1,108,944) 1,821,257 1,108,944 - - - -
Issuance of 550 shares of
Series A Convertible
Preferred, net of costs 507,418 - - - - - -
Net Loss, September 30, 1996 - - - - (588,549) - -
-------------- ------------- ------------- ------------- ------------- ----------- -----------
Stockholders' Equity,
September 30, 1996 $1,694,856 6,238,329 $8,383,873 $99,082 ($4,288,468) $352,073 ($668,017)
============== ============= ============= ============= ============= =========== ===========
</TABLE>
F-5
<PAGE>
INTERNATIONAL FIBERCOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Significant accounting policies:
Basis of presentation:
In the opinion of management, the accompanying consolidated financial
statements reflect all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of
September 30, 1996 and the results of its operations for the nine
months ended September 30, 1996. Although management believes that the
disclosures in these financial statements are adequate to make the
information presenting not misleading, certain information and footnote
disclosures normally included in financial statements that have been
prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of
the Securities Exchange Commission.
The results of operations for the nine months ended September 30, 1996
are not necessarily indicative of the results that may be expected for
the full year ending December 31, 1996. The accompanying consolidated
financial statement should be read in conjunction with the more
detailed financial statements, and the related footnotes thereto, filed
with the Company's Annual Report on form 10-KSB for the year ended
December 31, 1995.
Principles of consolidation:
The consolidated financial statements include the financial position,
results of operations and cash flows of International FiberCom, Inc.,
and its wholly-owned subsidiary, Kleven Construction, Inc. All material
intercompany transactions, accounts and balances have been eliminated.
Stock options, and restricted stock plans:
At September 30, 1996 the Company had a stock-based compensation plan,
described below. The Company applies APB Opinion 25 and related
Interpretations in accounting for its plan. There was no compensation
cost charged against income for its performance-based plan for the
period ended September 30, 1996. Had compensation cost for the
Company's stock-based plan been determined based on the fair value at
the grant dates for awards under the plan consistent with the method of
FASB Statement 123, the Company's net loss and loss per share would
have been changed to the pro forma amounts indicated below:
F-6
<PAGE>
INTERNATIONAL FIBERCOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, 1996 September 30, 1996
------------------ ------------------
<S> <C> <C>
Net Loss As reported $471,251 $588,549
Pro Forma $471,251 $625,749
Primary Loss Per Share As reported .08 .10
Pro Forma .08 .10
</TABLE>
During the year ended December 31, 1994, the Company adopted the 1994
Incentive Stock Option Plan. The Plan authorizes the Company to grant
incentive stock options and non-qualified stock options to key
employees of the Company. In addition, the Company has adopted the 1994
Restricted Stock Plan. This Plan authorizes the granting of restricted
shares of common stock to key employees, consultants and researchers.
Under the above Plans, 441,707 shares of common stock are reserved for
issuance. During the nine months ended September 30, 1996, 365,000
options were granted at an exercise price of $1 1/8 per share with a
term of 10 years. No restricted common stock was awarded pursuant to
the aforementioned plans. None of the options have been exercised as of
September 30, 1996.
In addition, during the nine month period ended September 30, 1996, the
Company issued 100,000 options to non-employees of the Company. The
options are exercisable at a price of $1 1/8 per share for a term of 10
years.
F-7
<PAGE>
PART II
OTHER INFORMATION
-----------------
Response to Items 1-5 are omitted since these items are inapplicable to this
report.
Item 6.
The Company filed a Report on Form 8-K dated March 31, 1995, with the
Securities and Exchange Commission, reporting the divestiture of International
Environmental Corporation.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
INTERNATIONAL FIBERCOM, INC.
BY /s/ Terry Beiriger
----------------------
Terry Beiriger,
Chief Financial Officer
DATED: November 14, 1996
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<CIK> 0000924632
<NAME> INTERNATIONAL FIBERCOM INC
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 63,373
<SECURITIES> 0
<RECEIVABLES> 2,428,808
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,535,618
<PP&E> 5,765,905
<DEPRECIATION> 2,221,287
<TOTAL-ASSETS> 9,465,962
<CURRENT-LIABILITIES> 3,196,565
<BONDS> 0
0
1,694,856
<COMMON> 8,383,873
<OTHER-SE> (4,505,330)
<TOTAL-LIABILITY-AND-EQUITY> 9,465,962
<SALES> 9,158,640
<TOTAL-REVENUES> 9,238,388
<CGS> 7,909,219
<TOTAL-COSTS> 9,547,606
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 279,331
<INCOME-PRETAX> (588,549)
<INCOME-TAX> 0
<INCOME-CONTINUING> (588,549)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (588,549)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> 0
</TABLE>
